White House escalates China trade dispute to secure early breakthrough: John Kemp

Dexter Carr |Saturday, August 04, 2018

Carlos Barria

Washington is preparing to also impose tariffs on an extra $US16 billion of goods in coming weeks, and Trump has warned he may ultimately put them on over half a trillion dollars of goods - roughly the total amount of USA imports from China previous year.

"The increase in the possible rate of the additional duty is meant to provide the Administration with additional options to encourage China to change its harmful policies and behavior", Lighthizer wrote.

Asked about communication between the two countries on the dispute, Geng said China had "always upheld using dialogue and consultations to handle trade frictions", but that dialogue must be based on mutual respect and equality. It will be September at the earliest before the USA decides whether to impose those tariffs. "So is the United States trying to put tariffs on its own companies?"

The U.S. has imposed tariffs targeting aerospace, robotics and other forms of technology, while China retaliated with tariffs on agricultural products, seafood and cars, among other things.

The EU heads of government will, according to Bloomberg, meet the leaders of nearly every major Asian economy in Brussels in October at a summit to discuss a co-ordinated response to the U.S. aggression on trade.

The threats and counterthreats have stirred increasing unease from USA business and farm groups, which argue that they are the ones losing money and business based on all the new restrictions. US Trade Representative Robert Lighthizer explained that the new tariff would follow Beijing's refusal to meet US demands. "First, we advise the USA side to correct its attitude and not to try to engage in blackmail", China's foreign ministry spokesperson Geng Shuang said on Thursday.

"But we don't think such an approach will work", he said.

Preliminary talks by Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He haven't produced even a plan for additional trade negotiations.

Trump has ultimately threatened tariffs on over $500 billion in Chinese goods, covering virtually all USA imports from China.

Still, it is hard for the United States and the European Union to reach a tangible agreement to "work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods", as Trump said, because of the contradictory ideas and opinions on the two sides. It will cost us jobs and investment.

Christopher Matthews is a writer who splits his time between New York City and Accra, Ghana, with an interest in the intersection of markets, the economy, and public policy.

However, this week the Republican president instructed him to consider raising 10 to 25 the taxes that would be applied to a list of products announced last July 10.

Thus, keeping an eye on China's imports of major commodities in coming months will be key to working out just how quickly the trade dispute is filtering through to the real economy, and determining if the phoney trade war has become a real one.

The caveat, with other comments, suggested Powell believed the Fed might be moving too aggressively to tighten USA monetary policy. The government reported last Friday that trade contributed 1.06 per centage points to the economy's 4.1 per cent annualised growth pace in the second quarter. After Liu visited Washington later that month, the nations released a joint statement pledging to reduce the United States trade deficit with China, among other things.

"China's trade abuses need to be addressed, but tariffs are not the answer".

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